Health and Social Care Bill

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Mr. Hammond: Will the Minister clarify whether that approach will be objective? Will performance of a given level—whether relative or absolute—measured against certain criteria, unlock certain amounts of money across the board, or is he proposing that the Secretary of State make a series of bilateral contracts with individual organisations?

Mr. Denham: The criteria would have to be objective. To use a hypothetical example, it would clearly be unacceptable for the Secretary of State to go to Darlington Memorial hospital trust and say, ``I was very impressed by the quality of the garden outside the chief executive's office. This is now a performance criterion for NHS trusts. Have another couple of million quid.'' It would not be acceptable for the Secretary of State to act in such an arbitrary way. Whether one is trying to set up the performance fund itself, or design a system for additional funds for good performance, it would have to be done using objective criteria. However, we cannot currently notify the criteria, or the system of measurement, in year. The amendments tabled by the hon. Gentleman would tie us to doing that at the point at which the allocations were made.

Mr. Hammond: I am not sure whether I agree with the Minister's interpretation on that last point, but we will return to that. He talked about the unacceptability of the Secretary of State being able arbitrarily to intervene in the allocation of funds, and how they should be allocated on an objective basis. Does he recall the Secretary of State alluding, in Health Questions two weeks ago, to the issue of the transitional funding allocation to West Surrey health authority, which is in my constituency? The regional office recommended that a certain amount be paid, and the Secretary of State, or Ministers, overrode that decision and allocated a smaller sum. My interpretation of ``objective'', in the context of the Government allocating money, is that the word describes a process determined by officials against objective criteria. As soon as Ministers start overriding official advice and recommendations, I get very nervous.

Mr. Denham: The hon. Gentleman will be relieved to know that there are a great many situations in government where Ministers override official advice. It is part of being in government and being a Minister—we receive advice, consider it and weigh it carefully, but then take our own decisions as to whether that advice is correct and whether we should act on it. That applies, in a number of different ways, to the decisions that Ministers make about the allocation of resources. I sought to reassure the hon. Gentleman that we do not intend our approach to the matter to be purely arbitrary.

I had concluded my general remarks about the relationship between the clause and the performance fund.

Mr. Hammond: Mindful of your earlier strictures, Mr. Maxton, I have thought carefully about whether this point is better made by way of an intervention or a second contribution. I do not understand the Minister's interpretation of the amendment as requiring that the criteria would be notified to health authorities and trusts at the time of the original allocation. I see nothing in the Bill or the amendment that would have that effect. It would be possible for the Secretary of State to notify additional criteria in year. However, it would be reasonable for him to notify, at the same time, the method that he proposed to use to measure performance against those criteria.

Mr. Denham: In the example that I gave, it would not necessarily be possible to identify the precise method of measurement at the same time as notifying the criteria. I was saying that although performance on therapist waiting times might be a helpful criterion, it might not be possible, for practical reasons, to give the precise measurement when the criterion was published; one might follow the other. The clause provides us with the necessary flexibility.

Mr. Hammond: Does the Minister not agree that this might have a bizarre perverse effect? Any organisation being told that a criterion for financial reward will be reduction in waiting times to see a therapist, without being told what level of reduction is required to receive the reward, may allocate more resources than the Minister thinks appropriate in order to achieve an as yet unknown target.

Mr. Denham: We have to be sensible about this and remember that its purpose is for the Government to be able effectively to incentivise good performance in the national health service. It is difficult to envisage circumstances in which any Secretary of State would deliberately create a situation in which health authorities, or trusts had no idea what they were meant to do in order to achieve a particular result in the performance fund—whether that was additional money or green-light status. Although I see the point that the hon. Gentleman is making, nobody would sensibly use the power in that way. The problem at the moment is that the Secretary of State is unduly constrained.

Kali Mountford (Colne Valley): I am grateful to my hon. Friend for giving way. Is it not better for the Government to intervene in order to incentivise and improve services, than merely to ensure that there were no schools closures, for instance, in Finchley or Huntingdon, as we were informed by the hon. Member for West Chelmsford (Mr. Burns) last week?

Mr. Denham: Indeed. My hon. Friend makes a good point. We were given an interesting insight into the nature of decision-making by the previous Government. That is not the way of this Administration. I do not believe, therefore, that the powers could sensibly be used in the way that the hon. Member for Runnymede and Weybridge has suggested. However, the inability to make in-year payments against in-performance is a restraint on the development of effective performance measures.

Mr. Hammond: Is the Minister giving way?

Mr. Denham: I was going to give way to the hon. Member for Sutton and Cheam, but he is no longer in his place, so I shall give way to the hon. Gentleman.

Mr. Hammond: I would not readily step into the shoes of a Liberal Democrat. Before the Minister makes further comments relating to the remarks made by my hon. Friend the Member for West Chelmsford last week, let me remind him of the increase in funding per capita to the NHS in the Durham health authority area compared with the increase per capita in funding for the NHS in the West Surrey health authority area since 1997. He may find something that rings a bell with the comments made by my hon. Friend last week.

Mr. Denham: The whole point of this, which we discussed last week, is that those allocations are an open process.

Mr. Hammond: Not any more. That is the point.

Mr. Denham: I do not believe that that will change. One can see there is funding there through the funding formula. One can see the allocation that has been made to areas that have been identified as health action zones. One can see the allocations that have been made because of the indicator of deprivation. It is a process that anyone can see. Of course it will always be possible for people to say that they would not have taken that decision. That is partly what Government is about—taking decisions, saying how they have been made and justifying them in political debate. No-one can say, however, that it is a procedure that is shrouded in secrecy or lack of transparency.

12.30 pm

Mr. Hammond: I hear what the Minister said. He may argue that need in Durham is greater than in Surrey; but costs in Durham are no greater than in Surrey, as my right hon. Friend the Member for South-West Surrey (Mrs. Bottomley) reminds health Ministers at every available opportunity. A patient waiting for elective surgery in south-west Surrey is nine times more likely to have to wait more than 12 months than a patient in the Prime Minister's constituency. Before the Minister goes further in his chosen direction, he might want to think carefully about those issues.

I am mindful that we have raised the issues of transparency and accountability to the public and to Parliament on the one hand, and certainty and objectivity and clarity in the assessment system imposed on trusts on the other hand. The subject can be adequately aired later, during our debate on amendments Nos. 67 and 68. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Dr. Brand: I beg to move amendment No. 40, in page 3, line 5, at end insert—

    `(c) Subject to paragraph 5A(2) of Schedule 3 to the National Health Service and Community Care Act 1990, payments may be made to improve unsatisfactory performance against those criteria set out in paragraph (b) above'.

We had an interesting debate on the first group of amendments to clause 2, during which the Minister said that the performance fund was not necessarily an additional fund and that it depended on meeting performance criteria. I am worried that we are using the wrong incentive. A good performance incentive for health trusts or health authorities would be that their local communities should enjoy better health; the trusts and authorities should be seen to have delivered that performance, but they should be able to achieve it in whatever way they want. The incentive would be that a hands-off approach could be taken and the trust or health authority would be rewarded for delivering the goods.

As the hon. Member for Runnymede and Weybridge suggested, rewarding on strict criteria would distort the way in which health is delivered. However, those who do not achieve green-light status will know that they will lose money; and that would be extremely dispiriting, especially if the failure were not their fault. In certain circumstances, some health authorities and trusts cannot deliver the goods at the same cost as elsewhere. Perhaps they cannot attract staff. That happens in inner cities because of housing costs; but it can happen in rural areas because there is less chance of private practice for consultants, because better jobs are available elsewhere for those who want to go into higher-level nursing and because it is more difficult to attract good managers. Those trusts may have to rely on locums and others who are not so committed to the service, but those people are more expensive to employ because they can market their services through agencies. The trusts will end up with a service that costs more but delivers less.

The amendment would provide a mechanism so that if a trust failed to achieve the criteria, whether published or not—everyone, including the trust itself, would know when the trust was not achieving them—the Secretary of State could make available extra money to try to overcome that problem. That would help to improve performance, which is the purpose of the modernisation fund. The phrasing of the clause implies that any moneys disbursed would go only to those who succeeded.

That would be an enormous disincentive to the people who, for many reasons, which I have tried to suggest, find it difficult to achieve what is desired. If we were to use education as a comparison, what is proposed would be like announcing that all schools would receive the same amount, and brilliant schools would receive even more. We would never, in social terms, accept that. At least I hope that even a new Labour Government would not accept it. I do not think that we should make that mistake with the health service.

I should like some more explanation about the red-light system. I hate this red zoning business, Mr. Maxton. The previous Secretary of State, the right hon. Member for South-West Surrey (Mrs. Bottomley), said the other day that if she were in a red-light zone she would be very worried. I have a problem with the fact that the greenies get everything and the yellowies may get something, with a few strings, but it is not clear from the Bill that those in the twilight red zone receive anything, even with strings attached. It is right that strings should be attached, if people are not performing properly, but it is not right that funds should not be attached to the support that is provided.

The Secretary of State has said that there may be some additionality in the clause. That is right in the case of something that is innovative and exciting: a pilot project that needs to be worked through and may be more expensive to start with. However, I do not support the rewarding of success with extra money as opposed to extra freedom.

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